Biocon in insulin deal with US drug major Bristol-Myers Squibb

MUMBAI/BANGALORE: India's biotechnology company Biocon has entered into a partnership for its oral insulin pill IN-105, giving the US drugmaker Bristol-Myers Squibb the option to exclusively develop and sell the product if the clinical trials prove successful.

Biocon, which signed an agreement with Bristol-Myers Squibb or BMS after a two-year search for a partner, will see through the drug till its phase 11 trial and it will retain the right to look for another partner if required.

As per the agreement, BMS will have the option of an exclusive worldwide licence if it finds that the trial results are positive. It will also take the full responsibility for the development and commercialisation of the product outside India while Biocon will have the exclusive rights to the product in the Indian market.

Biocon is entitled to receive licence fee in addition to potential regulatory and commercial milestone payments plus royalties for IN-105 outside India, if BMS decides to take the molecule forward.

Though the two companies did not disclose the financial terms of the agreement, analysts pegged the deal at $300-$350 million (Rs 1,650- 1,900 crore) and said that Biocon would be entitled to the cost incurred on the clinical trials of the drug.

"This agreement is one huge step closer to realising the dream of bringing oral insulin to market. We are excited to extend the excellent relationship we already enjoy with Bristol-Myers Squibb and look forward to working closely with them to make this a reality," said Biocon managing director Kiran Mazumdar-Shaw.

With 350 million adults suffering from diabetes across the world, the global market for the disease is estimated at $40 billion (about Rs 2.2 lakh crore).

Experts say that oral insulin, a painless and simpler option for diabetes patients, can prove to be a coming-of-age drug for Biocon and substantially increase the company's market cap. However, the markets didn't give immediate thumbs up to the deal, as Biocon's shares closed at Rs 292.25, down 4.74% on BSE on Friday.

"Unlike the Pfizer deal, requiring Biocon to undertake the development of insulin biosimilars, here it is vice-versa, where BMS, upon exercising the option, shall be doing the development and commercialisation of the new drug molecule," said Bhavin Shah, senior analyst at brokerage firm Dolat Capital.

"In such a deal, the upfront payment will necessarily be higher and followed by back-ended payments and royalties." Biocon had been struggling with its diabetes business after Pfizer decided to terminate its earlier agreement.